Xi vows to further open China economy as United States trade spat simmers

Saturday, 14 Apr, 2018

Also Thursday, President Trump said he will consider joining revised Trans-Pacific Partnership (TPP), a trade group of 11 Pacific Rim nations, which might give the USA additional leverage in any talks with China.

The US has threatened to impose tariffs on as much as $150bn (£105bn) of Chinese imports in response to what it says are unfair Chinese trade policies that protect domestic markets while forcing foreign companies to hand over their technology and intellectual property.

"If the U.S. side takes its own course and insists on carrying out unilateralism and trade protectionism, the Chinese side will fight resolutely and take them on until the end", Gao told reporters at a regular news briefing.

Daiwa securities senior strategist Yukino Yamada said the speech was quite a surprise, particularly because of rising concerns that the US-China trade friction was unsolveable. "I think we're having some great discussions, we'll see what happens". USA companies have long argued that China uses a range of tactics to force them to transfer intellectual property such as industrial designs and patents, and that Chinese entities engage in widespread theft of US trade secrets. If the US and China both place tariffs on imports from the other, industrials face greater costs as well as with lower sales.

The US State Department also hailed Xi's remarks.

China will accelerate the opening-up of the insurance industry, ease restrictions on the establishment of foreign financial institutions in China and expand their business scope, and open up more areas of cooperation between Chinese and foreign financial markets.

"We support companies that are willing to come together on their own", he said in an interview on Wednesday on the sidelines of the Boao Forum in Hainan province. The U.S. sold about $130 billion in goods to China in 2017 and faces a potentially devastating hit to its market there if China responds in kind.

"The commercial appetite of Chinese firms for USA investment expansion is stronger than ever, but regulatory hurdles are unlikely to fade in Beijing and will nearly surely increase in the U.S., casting uncertainty over the near-term outlook", the report said. Those changes leap from the Trump administration's list of grievances, although Xi didn't mention his government's simmering standoff with the United States. "Also, his enlightenment on intellectual property and technology transfers".

The speech "underdelivers after all the hype from Beijing", Eurasia Group's Evan Medeiros and Michael Hirson wrote in a research note. The same set of data from the USA shows the Chinese firms sold $402 billion of goods and services to the US in 2015, $10 billion through Chinese subsidiaries in the States and $393 billion through exports.

The meeting was held before Trump instructed officials to consider tariffs on an additional $100 billion in Chinese imports, bringing the value of the nation's products set for higher duties to about $150 billion. And he said that although the US hoped to avoid taking action, Trump "was not bluffing". If he does, the political ramifications could be such that he's not in office much longer to keep the trade war going anyway.

Yi also said China would not devalue its currency as a weapon in a trade war, state television said.

The trade war will not leave the Chinese economy unscathed - far from it.

There are still hopes that Trump's headline-grabbing tariffs are part of a plan to take a harsh line as a bargaining tactic towards a deal with China.